Bitcoin is relatively in a no-trade zone at the time of writing. The sideways trading has seen the cryptocurrency dance around $37,000 for several days. Price actions toward $40,000 have diminished, while the immediate support at $36,000 appears vigorously defended.
Meanwhile, it is vivid enough to see the formation of a pennant pattern. This is both a reversal and continuation technical pattern. Bitcoin may resume the downtrend if it matures as expected, exploring the levels under $30,000 toward $27,000.
Bitcoin bulls battle against increasing odds
Pennant patterns appear on charts resemble flags in their structure but are characterized by converging trend lines as the asset consolidates. Note that the consolidation is expected to last from as little as one week to three weeks.
The volume at every point of the pennant is critical. Note that the volume must be enormous at the beginning but weaken as the pattern narrows. At maturity, the pennant is affirmed by a large volume leading to another significant price movement.
As for Bitcoin, the bearish pennant pattern will likely culminate in a downswing equal to half the length of the flag pole. Therefore, traders must be on the lookout for increasing volume as the price nears the ascending trend line.
BTC/USD 12-hour chart
Looking at the other side of the fence
The Moving Average Convergence Divergence (MACD) shows that the prevailing trend slightly favors the bulls. This follows a gradual movement from May’s low of -4,400 to levels above the mean line (0.00).
It is worth mentioning that the MACD line’s divergence of the signal line is a bullish signal. Hence, if the technical picture holds, Bitcoin could slowly resume the uptrend as bulls launch an attack on $40,000.
Bitcoin intraday levels
Spot rate: $37,480
Support: $36,000 and $34,000
Resistance: $38,000 and $40,000
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